Electricity Transmission
Electricity transmission assets provide the critical link for the transmission of electricity from generators to consumers of electricity. Electricity transmission is a natural monopoly and is generally provided by a single supplier, with revenues regulated either on a cost plus basis or under long-term concessions. Both of these revenue mechanisms provide secure cash flow streams that, in many instances, are not subject to volume or utilization risk.
Due to their combination of high capital costs and low variable costs, electricity transmission systems generally have very high operating margins. Since the cost of electricity transmission is typically a minor component of an end user’s electricity bill, regulators in many jurisdictions are sanctioning pricing regimes that encourage capital investment to ensure reliability and support economic growth.
Brookfield has 80 years of operating experience in the electricity transmission business with assets in Northern Ontario and Chile. Institutional investors are attracted to this regulated rate base business since it matches long duration liabilities and grows with inflation.
We believe that our transmission operations have a number of attractive attributes that position us well for continued strong and growing cash flows:
- Stable revenues with inflationary growth
- Strong free cash flow generation – regulated or contractual – that provides a pre-established return on investment
- Diversity across regulatory regimes
- Significant opportunities to invest in system expansions at attractive returns
Current electricity transmission operations
- 100% interest in transmission lines
- Located in Ontario
- 18% interest in transmission lines
- Located in Chile
